Business Finance MCQs

Question 1

Which of the following combinations of rules stands true while preparing a schedule of changes in working capital?

Accepted Answer

Increase in current assets decreases working capital

Answer

Increase in current assets increases working capital

Answer

Increase in current liabilities decreases working capital

Answer

Increase in current liabilities mcreases working capital

Question 2

Need for budgeting arise due to

Accepted Answer

All of these

Answer

relatively high cost

Answer

permanent commitment

Answer

long-run effect

Question 3

Under which of the following exchange rate systems, exchange rates are either held constant or allowed to fluctuate only within very narrow boundaries?

Accepted Answer

Fixed exchange rate system

Answer

Freely floating exchange rate system

Answer

Managed float exchange rate system

Answer

Pegged exchange rate system

Question 4

When a company gives an option to its shareholders to receive dividend either in cash or kind, then it is called

Accepted Answer

option dividend

Answer

option currency

Answer

option shareholders

Answer

None of these

Question 5

Efficient frontier comprises of

Accepted Answer

efficient portfolios

Answer

inefficient portfolios

Answer

portfolios that have negatively correlated securities

Answer

portfolios that have positively correlated securities

Question 6

Which method does not consider the time value of money?

Accepted Answer

Average Rate of Return

Answer

Net Present Value

Answer

Internal Rate of Return

Answer

Profitability Index

Question 7

In 2 years, I am set to receive Rs. 1,00,000. If the interest rate were to suddenly decrease, the present value of that future amount to me would

Accepted Answer

Rise

Answer

Fall

Answer

Remain unchanged

Answer

The answer needs more information

Question 8

A firm's cost of capital is the

Accepted Answer

overall cost of financing to the firm

Answer

cost of bonds

Answer

cost of issuing stock

Answer

None of the above

Question 9

There are important differences between translation, transaction and economic exposure. Which of the following statements regarding these differences is true?

Accepted Answer

Economic exposure is essentially subjective because it depends on estimated future cash flows for an arbitrary

Answer

Translation and economic exposure look to the future impact of an exchange rate change which has occurred or may occur

Answer

Translation and transaction exposure involve actual or potential cash flow changes

Answer

Economic exposure is essentially objective because it depends on outstanding obligations which existed before changes in exchange rates